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FEDERAL RESERVE BANK OF RICH M ON D
MONTHLY
REVIEW
Major Postwar Bear Markets
Changes in Fifth District SMSA’s
The Fifth District
MAJOR
POSTWAR
BEAR
MARKETS
Am ong professional financial observers, it is
axiomatic that stock prices behave capriciously and
unpredictably. The market, it is said, is a lady,
with an apparently boundless capacity to dumbfound
the most diligent would-be expert. Yet a glance at
the behavior over prolonged periods of widely ob
served composite measures of stock prices suggests
that, at least for the intermediate and long term,
stock prices follow a rather pronounced pattern.
Stock prices have generally risen since W orld
W ar II, reaching levels close to five times higher
than 1946 levels, but this upward trend has been
interrupted by several periods of rather prolonged
declines. This article examines each of these post
war bear markets in some detail. The price averages
used in examining the bear markets are based on
common stocks traded on stock exchanges, and do
not include stocks traded over-the-counter or out
side the exchanges.
Definition A bear market is a market of gen
erally declining prices. A bear is one who expects
prices to continue falling and may thus sell his stock
and get out of the market. A bear also may sell short,
that is, sell stock he does not own at current prices, on
the expectation that prices will fall and he will be able
to cover his position in the future. Before the se
curities legislation of the 1930's, it was an all-too2
frequent practice for one or more large traders to
make successive short sales of weak stocks, pushing
prices even lower, and then to cover at a very low
price to reap a rich profit. In this article, the bear
markets discussed have a duration of at least eight
months and show a decline in Standard and P oor’s
composite average of at least 10%.
W hat Determines Stock Prices?
N um erou s
factors figure in stock price movements. Among the
most important factors are expectations about future
business conditions, the cost and availability of credit
to be used for purchasing and carrying stock, the
relative attractiveness of investments in bonds, sav
ings deposits, and other alternatives to stocks, and
overall investor psychology. The most nebulous and
unpredictable of these is investor psychology, which
has proved highly sensitive to a large variety of non
economic, as well as economic, developments.
Most investors act according to their expectations
of future economic activity. Perhaps the most widely
recognized determinant of their behavior is corporate
after-tax profits. These, of course, depend on many
economic variables such as prices, costs, and volume.
T o the extent that investors correctly foresee future
economic developments and invest in securities ac
cording to their foresight, the movement of stock
prices serves as a leading indicator of economic
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activity. Since the foresight of investors is not
perfect, however, and since prices often reflect short
term speculative trading, that is, seeking profits
through price changes based 011 news, stock prices
do not mirror future economic activity perfectly.
Notwithstanding, stock prices have long been used
as a leading indicator.
Stock market credit, as measured by customers’
net debit balances with brokers and dealers (plotted
on the charts), is closely related to stock price move
ments.
Debit balances represent loans by brokers
to customers.
Increases in debit balances during a
rising market generally contribute to the upward
pressure
on
prices.
Conversely,
declining
debit
balances often reflect net sales by margin traders,
which
exert
a bearish
influence.
Over-extended
credit, although ordinarily linked with bull markets,
has been known to accentuate market downswings
if margin traders become heavy sellers in order to
repay their loans.
It is partially as a result of such
a selling wave in the late 1920’s and early 1930’s
that margin trading was brought under the regula
tion of the Board of Governors by the Securities E x
change
A ct
of
1934.
Margin
requirements
are
stated as the percentage of the purchase price of the
stock which the investor must supply.
The Stock Averages W h a t stocks are used to
compile the several composite averages which are
read and studied daily by millions? A s the term
implies, composite averages include the stocks of
companies with a wide range of activities and
characteristics. They are usually broken down into
averages for industrials, railroads, and utilities. The
chart shows that these three components of the DowJones average have moved in a pattern similar to
the over-all postwar pattern of Standard and P oor’s
composite index, reaching peaks and troughs at or
near the respective beginning and end of each bear
market. The greatest fluctuations have appeared in
the industrials and rails while utilities have , shown
smaller relative changes.
Standard and P oor’s
averages for the same three groups, based 011 much
larger samples, also reveal patterns similar in timing
to the composite averages, and are similar in degree
of fluctuation to the Dow-Jones groups.
Another breakdown of the composite averages
shows low-price stocks. These are generally con
sidered to have greater price fluctuations than higherpriced stocks. This is confirmed by the large rises
and falls since W orld W ar II in the low-price stock
index, as shown in the chart.
The Bear Markets Since W o rld W a r II there
have been four major cyclical downswings in
3
STOCK PRICES, CREDIT, A N D V O LU M E
P rice In d e x 1 9 4 1 - 1 9 4 3 =
1946
N o te :
S o u rc e :
10
194 8
1950
195 2
19 5 4
S h a d e d a re a s d e n o te th e b e a r m a rk e ts , a n d d o t te d
t u r n in g p o in ts .
B o a rd o f G o v e r n o r s o f th e
1 95 6
lin e s
4
1958
N a tio n a l
1960
B u re a u
of
19 6 2
E c o n o m ic
1964
R e search
b u s in e s s
1 96 6
c y c le
F e d e ra l R e serve S y s te m .
aggregate economic activity which have been dated
by the National Bureau of Economic Research.
Each of these downturns was preceded by a period
of declining stock prices. W hile it is not possible
to demarcate bear markets associated with each re
cession in such a way as to elicit agreement among
all market observers, the bear markets fall generally
within the limits set forth below:
(1 ) June 1946
through June 1949; (2 ) February 1953 through
September 1953 ; (3 ) August 1956 through Decem
ber 1957; and (4 ) August 1959 through October
1960. In addition to these which were associated
with subsequent declines in economic activity, there
was another bear market between January and O c
tober 1962. Even though it was one of the deepest
declines of the postwar period, it was not followed
by a recession. In February 1966 the sixth postwar
d e n o te
bear market began, but it is still too early to measure
its length and depth or to say whether it foretells
a recession.
The Bear Market of 1946-49 Th e bear market
of 1946-49 actually encompasses two major periods
of declining prices with rather sizable fluctuations
between the two large downward movements. Prices
declined sharply from June through November of
1946, then fluctuated within a range of 10% through
February 1948. From February to June 1948 prices
rose 19%.
This major rebound was followed by a
16% decline between July
1948 and June 1949.
Thus it appears that the major bear market of
1946-49 can be divided into two subcycles— the period
from June to November of 1946 and the period from
July 1948 to June 1949.
The immediate postwar period must he examined
separately from the rest of the bear market. Follow
ing the war, most market participants did not foresee
the unleashing of pent-up demand. Rather, there
was a general feeling that a downturn in the economy
would occur as military needs greatly diminished.
From 1944 to 1946 gross national product leveled
off after a steady rise through the early 1940’s, and
though corporate profits bottomed out in 1945, the
weakness of these two variables at the end of the war
lent support to early postwar fears.
Corporate profits were especially disturbing to the
investor. W hile they rose sharply in 1946, dividends
showed no increase at all. T o a market fearful of a
recession this was not a good sign even though
businesses were using profits to increase expenditures
on new plant and equipment from under $9 billion
in 1945 to $22 billion in 1948. T o an investment
community with vivid recollections of the sharp post
war recession of 1921 and the stock market crash
of 1929, these large investment expenditures did not
elicit a bullish response. Moreover, as the pent-up
demand of W orld W ar II began to be reflected in
mounting inflation, the Board of Governors raised
the margin requirement from 75% to 100% on
January 21, 1946. This action was designed to dis
courage speculative activity, “ a characteristic and
feeder of inflation,” and the subsequent drop in debit
balances contributed to the fall in the market several
months later.
During the bull market which extended from early
1942 to early 1946, the volume of credit and the
various indexes of stock prices had risen amid
speculative activity. The bear market of 1946 saw
sharp declines in Standard and P oor’s composite in
dex, the composite price-earnings ratio, and the index
of low-price stocks. From the peak of prices in May
until the sharp decline was arrested in November,
Standard and P oor’s composite average fell 4.01
points, or 21.4% , a decline in percentage terms which
was equaled in the postwar period only by the
decline in 1962.
The second phase of the first postwar bear market,
(Continued on page 8)
STOCK PRICES, CORPORATE PROFITS, A N D THE PR ICE-EAR NING S R ATIO
P r ic e -ln d e x
1 94 6
N o te :
S o u rc e :
1 9 4 1 -1 9 4 3 = 1 0
1948
1950
195 2
1954
19 5 6
S h a d e d a re a s d e n o te th e b e a r m a rk e ts , a n d d o t te d
tu r n in g p o in ts .
U. S. D e p a r tm e n t o f C o m m e rc e , a n d S ta n d a r d
and
lin e s
d e n o te
19 5 8
N a tio n a l
P o o r's S e c u rity
P rice
I9 6 0
B u re a u
In d e x
of
19 6 2
E c o n o m ic
1964
R e search
b u s in e s s
19 6 6
c y c le
R e cord .
5
Le g e n d
Changes in Fifth District
□
S M S A 's:
1 9 6 4 lis t
I I
S M S A 's:
19 6 5 a d d itio n s
fH
S M S A 's:
1967 changes
Standard M etropolitan Statistical kreas
BALTIMORE
A S H l AN D
CHARLESTQiSl
D e fin itio n s
S ta tis tic a l
of
f iv e
A re a s
in
S ta n d a rd
th e
F ifth
M e tr o p o lita n
F e d e ra l
R eserve
Baltimore
w e re
1967.
changed
or
e n la rg e d
in
M a rc h
Anne
D u rh a m
C o u n ty
SM S A 's
w e re
re d e fin e d
These
changes
th r o u g h o u t
by
th e
f o llo w
the
F o rm e r d e f in itio n :
1 ,8 4 4 ,4 1 0
tw o
o f th e
a d d itio n s
w h ic h
B u d g e t.
in
1965
w h e n F a y e tte v ille a n d W ilm in g to n , N o rth C a ro
NORFOLK-PORTSMOU TH
D is tric t o f C o lu m b ia ; M a r y la n d c o u n tie s o f M o n t
g o m e ry
and
P rince
G e o rg e s ;
c u rre n tly
p o rtio n s o f tw o
co n c e p t
in c lu d e s
e ig h te e n
and
F alls C h u rch
in
V ir g in ia .
th e
d a ta
on
a
S ta n d a rd
s ta n d a rd
M e tr o p o lita n
g e o g r a p h ic a l
F o rm e r d e f in itio n :
2 ,4 1 7 ,7 6 5
CHARjiOTTE
GREENVILLE
ba sis
f o r m e r ly
s e p a ra te
SM S A 's
Point
of
th e
SM SA
in v o lv e s
H ig h P o in t (G u ilfo r d C o u n ty ) a n d W in s to n -S a le m
R a n d o lp h
and
Y a d k in
co u n tie s .
d e fin itio n :
COLUM BIA
d e n s ity
and
c rite ria
c h a ra c te ris tic s
based
on
5 7 0 ,6 7 9
of
th e
^■ A U G U S T A
G re e n s b o ro -H ig h P o in t
W in s to n -S a le m
2 6 7 ,5 1 3
2 1 0 ,5 6 6
Sources:
la b o r
Durham SMSA:
fo rc e o f c o n tig u o u s c o u n tie s , a n d
W ILM IN G T O N
The d e f in i
p o p u la tio n o f a c e n tra l c ity o r citie s, th e p o p u la
tio n
FAYETTEV
F
AY E T T EV fU I
G re e n s b o ro -
F o rm e r d e fin itio n :
of
V
V
SMSA:
(F o rsyth C o u n ty ) c o m b in e d w ith th e a d d itio n o f
P o p u la tio n : N e w
f o r p u rp o s e s o f e c o n o m ic a n a ly s is .
tio n
RALEIGH
2 ,5 2 1 ,9 6 2
Greensboro-W inston-Salem-High
S ta tis tic a l A re a w a s d e v e lo p e d to p re s e n t s ta tis
tic a l
GREENSBOROW IN STO N -SALEM H IG H PO INT
ASHEVHLE
and
o th e rs.
of
and
O f 231 S ta n d a rd
The
The
A r lin g to n
F a ir fa x c o u n tie s , a n d citie s o f A le x a n d r ia , F a ir
M e tr o p o lita n S ta tis tic a l A re a s in th e n a tio n , th e
D is tric t
Loudoun a n d '
P rince W illia m c o u n tie s in V ir g in ia a d d e d to th e
P o p u la tio n : N e w d e f in itio n :
F ifth
LYNCHBURG
NEWPORT NEWS-
fa x ,
lin a w e re d e s ig n a te d S M SA's.
RO ANOKE •
a re a m o n g
c o u n try
B u re a u
to
1 ,9 3 9 ,8 2 0
Washington, D. C.-Md.-Va. SMSA:
tw e lv e
added
A ru n d e l.
P o p u la tio n : N e w d e f in itio n :
B a ltim o re , W a s h in g to n , G re e n s b o ro -H ig h
P o in t, W in s to n -S a le m , a n d
H a r fo r d
B a ltim o re c ity a n d c o u n tie s o f B a ltim o re , C a rr o ll,
H o w a rd ,
D is tric t
SMSA:
th e e c o n o m ic
Orange
County
added
to
CHARLESTON
SMSA d e fin itio n s :
U. S. B ureau o f the B udget.
Ju ly 1965 p o p u la tio n e stim ates: U. S. D e p a rtm e n t o f C o m
merce, Bureau o f the Census; D ep a rtm e n t o f H e a lth , State
D u rh a m C o u n ty .
o f M a ry la n d ; B ureau o f P op u la tio n a n d Economic Research,
a n d s o c ia l re la tio n s h ip s b e tw e e n th e c e n tra l c ity
and
c o u n ty .
P o p u la tio n : N e w
d e f in itio n :
1 6 7 ,7 3 9
F o rm e r d e f in itio n :
1 1 9 ,6 0 8
U niversity
of
V irg in ia ;
A g ric u ltu ra l
E xpe rim e nt
N o rth C a ro lin a State U n iv e rs ity a t Raleigh.
S ta tio n ,
from July 1948 to June 1949, followed two years of
economic growth. During this two-year period,
stock prices and customer credit remained fairly
stable, though never regaining 1946 levels. Margin
requirements were lowered to 75% on February 1,
1947, following the drop in prices in 1946. In the
second half of 1948, corporate after-tax profits began
to slide and stock prices also started to fall. Standard
and P oor’s average fell 16.9%, from 16.82 in June
1948 to 13.97 in June 1949. In November 1948,
about four months after the start of the decline in
stock prices, the economy entered its first postwar
recession. On March 30, 1949, the Federal Reserve
reduced margin requirements to 50% , and the volume
of customer credit started to increase sharply. Three
months later the first postwar bear market ended,
about four months ahead of the low point of the
recession in October. The System explained the
change in the margin rate by saying that recent
months had shown an easing of in fla t io n a r y
pressures.
In the spring of the year, before the peak in economic
activity as dated by the National Bureau of Economic
Research, the Federal Reserve turned to a policy of
monetary ease, feeding reserves into the economy and
lowering reserve requirements. But following the
Korean truce in July 1953 expenditures for national
defense were cut back sharply. A t the same time
inventory expenditures were declining. Despite this
evidence of weakness in the economy, stock prices
turned up in October, three months after the start
of the recession and almost a year before the end of
the recession. The short lived decline in stock prices
can be variously explained. On February 20, shortly
after stock prices started to fall, the Board of
Governors decided that inflationary pressures had
moderated sufficiently to justify dropping margin
requirements to 50% . Stock market credit im
mediately shot up, no doubt cushioning the decline in
prices. Another factor in the early upturn of stock
prices was the Treasury’s announcement in late
September that it would suspend the corporate excess-profits tax after 1953.
Also, bond yields
started to decline late in 1953, increasing the at
tractiveness of stocks to the investor.
The Bear Market of 1953 From late 1949 until
about m id-1953, business expanded rapidly, stimu
lated partly by the Korean War. As the economy
expanded, inflationary pressures mounted and were
felt in the stock market as prices there rose. In an
effort to curb speculative price increases, margin re
quirements wrere raised to 75% in January 1951. The
volume of stock market credit leveled off. but stock
prices continued to rise at only a slightly reduced
pace for many months. As the business boom moved
steadily ahead, the Federal Reserve System adopted
a progressively firmer monetary policy. The Open
Market Committee turned to a firm monetary policy
in April 1952, and the discount rate was raised in
January 1953.
In February 1953 the second postwar bear market
started and lasted only eight months, until Septem
ber 1953. During this shortest of the postwar bear
markets, Standard and P oor’s composite average fell
from 26.18 to 23.27, a drop of about 11%. This
drop can be attributed in part to a sharp increase in
interest rates in 1953. Following the “ A ccord ” with
the Treasury in 1951, which ended the “ peg" of
The Bear Market of 1956-57 F o llo w in g a tw o
and one-half year period of steadily rising stock
prices, the stock market again became bearish in
August 1956. Between that time and the end of
1957 Standard and Poor's average dropped 17.3%
to 40.33. This period of market weakness appears
to have been associated primarily with uncertainties
in the prospects for business profits and with sharply
rising bond yields.
Following steady increases in the preceding two
years, corporate profits leveled off early in 1956, some
seven months before the market decline of that year.
For a time profits held on a high plateau and partly
in response to this steady performance stock prices
enjoyed a strong but brief upsurge from March
through July 1957. During this upsurge, prices ap
proached their 1956 levels, but profits again began
to slide in the middle two quarters of 1957 and stock
prices started back down just as business peaked and
the third postwar recession started.
Throughout the 1956-57 bear market, margin re
quirements remained unchanged at 70% . Net debit
balances stayed on a high plateau for most of the
MAJOR
POSTWAR
( C o n tin u e d f r o m
BEAR
MARKETS
p a g e 5)
Government bond prices, yields on Government bonds
period but declined sharply as prices plummeted in
had risen steadily and other interest rates were
August 1957.
high in 1953.
sharply, and in January 1958, at the end of the bear
The bear market of 1953 started about five months
Late in 1957 bond yields dropped
market, margin requirements w^ere lowered to 50%
ahead of the second postwar recession and ended al
and credit and prices shot up.
most a year before the recession touched bottom.
later margin requirements were raised twice in three
8
About seven months
months, first to 70% , then to 9 0% , the highest since
1946. Even so, the volume of credit continued to
rise rapidly for another six months, until April 1959.
Supported by rising credit and rapidly rising profits,
stock prices rose sharply from the spring of 1958
to the summer of 1959.
continued down throughout 1960 and in May 1960
the country entered its fourth postwar recession,
nine months after the start of the bear market. The
combination of bond yields finally dropping during
the recession and the Federal Reserve lowering the
margin requirement to 70% in July 1960 was
gradually absorbed by the stock market, and in N o
vember stock prices turned upward, three months
ahead of the upturn in the economy.
The Bear Market of 1959-60 T he fourth postw ar
bear market reflected rising interest rates, which
probably drew some investors away from stocks, and
sharply dimmed business prospects. From August
1959 to October 1960 Standard and P oor’s average
dropped 10.1% to 53.73. Profits peaked in the
second quarter of 1959, and on July 15, 1959, the
nation’s longest steel strike began, lasting until
January 1960. Except for the first quarter, profits
The Bear Market of 1962 T h e market rose until
January 1962, when the country entered a bear
market unique in the postwar period.
Unlike
previous bear markets, it was not followed by a re
cession. Yet from January to October Standard
and P oor’s composite average fell 21.7% , a decline
D O W -JO N E S STOCK AVER A G ES
(M O N T H L Y H IG H S O F D A IL Y A V E R A G E S )
D o w -J o n e s In d e x
19 4 6
N o te :
1 94 8
t u r n in g
S o u rc e :
1950
195 2
19 5 4
S h a d e d a re a s d e n o te th e b e a r m a rk e ts , a n d d o tte d
1956
lin e s
d e n o te
195 8
N a tio n a l
I9 6 0
B u re a u
of
1962
E c o n o m ic
1964
R e search
b u s in e s s
19 6 6
cy c le
p o in ts .
S ta n d a r d a n d P o o r's S e c u rity Price In d e x R e cord .
9
equaled in the postwar period only by the sharp
1946 break. During this period the new market for
negotiable certificates of deposit grew rapidly as in
vestors were attracted by the increase from 3% to
4 % in the rate payable by banks on time and savings
deposits.
Following a period of speculative activity in 1961
when stock market credit rose rapidly and the priceearnings ratio reached the highest level since 1946,
stock prices started to fall gradually in the first
quarter of 1962. Some of the leading indicators of
economic activity had peaked and turned down late
in 1961 and others reached highs during the first
quarter of 1962.
An exception was corporate
profits, which had a slower rate of growth in 1962
but did not decline. The steel price controversy in
April 1962, which had unfavorable effects on the
image of the Administration in the business com
munity, was followed by sharp losses in the stock
market in May and June. During the second quarter
of the year prices dropped 20.9%. On July 10.
1962, the Federal Reserve lowered the margin rate
to 50% and credit expanded rapidly, followed in
four months by an upswing in stock prices which
lasted into 1966.
The decline in stock prices coupled with the be
havior of other leading indicators led to widespread
speculation that a recession was in the offing.
Actually, there occurred only a slowdown in economic
activity. Any recessionary tendencies present in the
economy seemed to be curbed by the combination of
timely Government counter-cyclical action plus the
expansionary effect of inventory building in anticipa
tion of a steel strike in m id-1963.
From 1962 through 1965 stock prices rose with
only minor interruptions. On November 6, 1963, the
margin requirement was raised to 70% and the
volume of credit declined until mid-1965. The be
havior of credit and stock prices during this period
was somewhat unique in postwar experience. Never
before had stock prices continued to rise for such
a long period after stock credit took a definite and
decided turn downward. This was due perhaps to
fairly sluggish long-term bond yields and to the
behavior of corporate profits, which rose with a speed
and persistence unprecedented in earlier postwar
periods of expanding economic activity. Stock market
credit began to expand rapidly again during the
second half of 1965. Other signs of speculative
activity appeared. The average daily volume of
trading on the New York Stock Exchange became
unusually heavy, and a sharp run-up occurred in
Standard and P oor’s index of low-price common
stocks.
10
The Bear Market of 1966 Th e m ost recent bear
market started in February 1966. During 1966
rising interest rates increased the attractiveness of
bonds relative to stocks, and from February to
October 1966 Standard and P oor’s composite stock
average fell 17.3%. The volume of stock market
credit also fell off, corporate profits showed slight
declines, and several leading indicators weakened
and turned down. In November and December of
1966 stock prices reversed their downward trend and
the upswing has carried into 1967, but lack of
perspective prevents further analysis of current stock
prices in their relation to the overall picture of prices
in the postwar period.
Conclusion T h e exam ination of the pattern o f
stock prices over the last twenty years reveals a
broad relationship to overall business activity.
During the last two decades major swings in stock
prices have tended to precede similar swings in the
economy. This pattern has not been without ex
ception, however, and in the short run the many
minor swings in stock prices tend to obscure major
movements and to limit the value of stock prices as
a leading indicator.
Second, profits and stock market credit seem to
be broadly related to stock prices. Varying degrees
of weakness in profits have been associated with
bear markets. The volume of stock market credit
generally has moved inversely with margin require
ments, while prices and stock market credit have
tended to move together. The volume of shares
traded is frequently cited as a measure of the strength
of price movements. For example, large and rising
volume associated with rising prices is said to be a
bullish sign while large and rising volume associated
with falling prices is given a bearish interpretation.
Viewed in the broad perspective of the postwar
period, the principal and most obvious relationship
is a spurt in volume at the beginning of bull markets
which tends to recede long before the period of rising
prices has run its course.
Third, the similarity of the long-run patterns of
the various stock price indexes indicates that investors
discount generally the same variables when investing.
Am ong these variables is, of course, the attractiveness
of alternative investments to stock.
W hile the post
war patterns of various stock indexes have varied in
amplitude of fluctuations, the upswings and down
swings have occurred almost simultaneously in the
composite averages,
the averages
of various
in
dustries, and the averages of high-grade and of
low-price stocks.
THE FIFTH DISTRICT
FARMERS' PLANTING INTENTIONS FOR 1967
District farmers’ plans for the 1967 planting season
point to a year of somewhat larger crop production
than in 1966. Total acreage of the principal field
crops planted or grown this year now promises to be
around 12,811,000 acres— 467,200 acres, or about
4 % , above a year ago but nearly 2% below the
1961-65 average. This outlook for 1967 crop plant
ings is based on the U. S. Department of A gri
culture’s March 1 survey of growers’ intended spring
plantings and acreages seeded to winter wheat and
rye last fall.
Most of the intended changes from a year ago in
1967 crop plantings are due to changes in farm pro
grams designed to expand wheat and feed grain
acreages and to continuation of both the acreagediversion provisions of the upland cotton program and
the flue-cured tobacco acreage-poundage program.
These factors, along with virtually unchanged acreage
allotments on most other controlled crops, provided
the backdrop against which District farmers mapped
this year’s operations. Some of the highlights, and
some of the details, of what can be anticipated from
their tentative plans are reported below.
Tobacco Acreage to Vary by Type
District
farmers’ intentions indicate that this year’s total
tobacco acreage, at 594,000 acres, will be only slightly
above 1966 plantings but nearly 10% below the
1961-65 average. Flue-cured acreage, anticipated at
536,000 acres, is the only type expected to be larger
than in 1966. Prospects call for a 1% , or 5,800-acre,
increase. Because of the acreage-poundage program
in effect for the third straight year, the increase pri
TOBACCO
T o ta l a c r e a g e w i l l b e a b o u t
th e s a m e as in 1 9 6 6 .
P la n s c a ll f o r 1%
m o re f lu e - c u r e d , n o c h a n g e in b u r le y ,
http://fraser.stlouisfed.org/
a n d th e s e d e c re a s e s :
M a r y la n d , 11 % ;
Federal Reserve Bank of St. Louis
CO TTON
marily reflects upward adjustments in marketing
quotas and acreage allotments for those flue-cured
farms that were unable to produce their entire 1966
poundage quotas.
Burley tobacco growers’ intentions point to 18,800
acres, the same as that harvested last year when
acreage dropped to the lowest level since 1942.
Burley will continue under acreage-allotment control
since farmers in a recent referendum again disap
proved the acreage-poundage program as they did
in 1966. Southern Maryland producers are planning
to set 32,000 acres, compared with 36,000 acres
harvested last year. A cut of this size, if carried
out, would put Maryland tobacco acreage at the
lowest level since 1928. Fire-cured tobacco farmers
are planning for 5,900 acres, while sun-cured growers
intend to set 1,300 acres. Should these plans ma
terialize, acreage of both types would be the smallest
since records began in 1919.
Cotton Acreage at Record Low Farm ers in the
Carolinas and Virginia indicated as of March 1 that
they intended to plant 595,000 acres of cotton this
year, 2% less than last year and almost two-fifths
lower than average 1961-65 plantings. Should these
intentions be carried out. the District’s cotton acreage
would be the smallest in over a century.
Even though 1967 allotments are the same as last
year, most producers have chosen the 35% acreagediversion option in the upland cotton program.
Under this program, in effect for the second straight
year, three-fourths of all District cotton farmers have
signed up to divert 318.700 acres (3 4 % of their total
m a te r ia liz e , 1 9 6 7 p la n t in g s w i l l b e 2 %
I f f a r m e r s 'M a r c h 1 in te n tio n s
SOYBEANS
P re s e n t in d ic a t io n s p o in t
t o f u r t h e r a c r e a g e e x p a n s io n in 1 9 6 7
b e lo w
— 7%
1966,
about
t w o - fifth s
b e lo w
th e 1 9 6 1 -6 5 a v e r a g e , a n d th e s m a lle s t
m o re
r o u g h ly
th a n
30%
a
above
year
th e
e a r lie r
m ost
and
re c e n t
the nation’s cotton farms are located in the Carolinas
comprised around three-fourths of total feed grain
seedings, is expected to show the biggest expansion,
with a 79,000-acre increase over 1966. Such an in
crease would put corn plantings at 3,428,000 acres.
2% above 1966 and 4 % larger than average. Barley
is expected to be planted on 367,000 acres, some
25.000 to 26,000 acres over both last year and
average. More sorghum acres are also expected for
this year, up about 10% over a year ago and 5%
above 1961-65. Prospective oat plantings, however,
are down 5% from 1966 and one-third below the
recent 5-year period, continuing the general decline
that has been going on for many years. Anticipated
and Virginia, they have only 7% of the country’s
total hay acreage is also lower, nearly 3% or 68,000
total cotton allotment.
acres under a year ago and 13% less than average.
allotted acreage)
from production in 1967.
The
agreed diversion compares with 33% for the nation.
The acreage allotment on cotton farms signed up.
however, accounts for only about 85% of the Dis
trict’s total cotton allotment as against better than
nine-tenths nationally. This fact is but one indication
that the number of small farms exempt from the
12.5% to 35% diversion option is far greater in the
District than in the country as a whole. Further evi
dence that many District farms have small cotton
allotments is the fact that, though nearly one-fifth of
Soybean Acreage
Up,
Peanut Acreage
Down
Soybean growers intend to expand District acreage to
Food Grain and Potato Acreages
Because of
world food shortages, there has been a sharp upturn
a new record level for the twenty-first consecutive
in 1967 food grain acreage to rebuild stocks.
year.
Prospective acreage, at 2,668,000 acres, is
allotments were increased 32% , and special program
7% above a year ago and roughly 30% larger than
provisions were made to encourage farmers to grow
1961-65 average seedings.
more
Such an increase, second
wheat.
With
these
stimuli,
the
Wheat
District’s
largest acreage expansion planned for the District's
seeded acreage of winter wheat, most important food
chief field crops, would boost 1967 soybean acreage
grain, jumped 261,000 acres over 1966— the biggest
by 173,000 acres over last year.
acreage gain among the major crops.
The Virginia-Carolinas peanut farmers expect to
Rye seedings
also rose, climbing 40,000 acres, or 7 % , over 1966.
These expectations, if
Prospects are that 1967 plantings of both Irish
realized, would put 1967 plantings at 3,000 acres, or
and sweet potatoes will be smaller than a year ago
1%, under 1966 and 7,500 acres, or 3 % , below
and also below the 1961-65 average.
average.
Though allotments are about the same as
acreage will show the biggest reduction, dropping
in 1966, indications are that farmers’ participation in
4.000 acres, or 8 % , under 1966 and 12% below
the Cropland Adjustment Program is having con
average.
plant 286,500 acres in 1967.
siderable effect on intended peanut plantings.
More Feed Grains, Less Hay
T otal feed grain
Sweet potato
Plans Could Change Farm ers’ intentions for 1967
spring-planted crops were reported during the signup
acreage intended for 1967 calls for a 2% increase
period for the feed grain and cotton programs. Later
over a year earlier.
decisions about farm programs, weather conditions,
The combined acreage, how
ever, would still be about 3%
average plantings.
12
less than 1961-65
Corn, which in recent years has
the labor supply, and other factors may cause them
to plant more or less than is now indicated.
@FedFRASER